Another cut to interest rates should be on the cards following the release of the latest inflation figures, according to Real Estate Institute of Australia (REIA) president, Peter Bushby.
The December 2012 quarter Consumer Price Index (CPI) figures show that the Reserve Bank of Australia’s (RBA) consumer price measures of inflation are within their target zone and stable, the REIA said.
“The annual change for the trimmed mean and for the weighted median was 2.3 per cent, compared to 2.3 per cent and 2.4 per cent respectively for the twelve months to September 2012,” Mr Bushby said.
Mr Bushby said the Reserve Bank should continue to deliver the much-needed cuts to interest rates that the economy needs.
“The latest figures are within the RBA’s target zone of two to three per cent and should provide a clear message to the board to further reduce official interest rates,” Mr Bushby said.
The housing group increased by 0.2 per cent for the December 2012 quarter compared to 3.2 per cent in the September quarter - the annual rate increase was 4.4 per cent.
The federal treasurer Wayne Swan shared Mr Bushby's enthusiasm, claiming the results should see a raft of rate cuts for borrowers in the coming year.
"Today's data confirms that inflation remains well contained with both headline and underlying inflation moderating in the quarter," Mr Swan said.
"That takes CPI inflation to 2.2 per cent over the year to December which remains at the very bottom of the RBA's target band. I think it's particularly encouraging to see that inflation has moderated in the December quarter after a number of one-off factors boosted the result in the previous quarter.
"The Government's fiscal discipline has contributed to contained inflation giving the RBA room to move to the cut the cash rate by something like 175 basis points over the year."
The main increases in the December quarter for the housing group were rents and maintenance and repairs, which increased by 0.8 per cent and 0.5 per cent respectively. For the year to December 2012, the biggest increases in the housing group were for electricity (17.7 per cent) and gas and other household fuels (17.3 per cent). Rents increased by 3.7 per cent for the year.
“With inflation under control and a subdued economy, it’s appropriate we see a further cut in interest rates when the RBA board meets for its first time on February 5,” Mr Bushby said.